The Budget 2021: How You Can Prepare

4 January 2021|Related :

Shortly after the 2020 budget was announced on 11 March this year, the UK went into lockdown as the coronavirus pandemic started to take hold. Unfortunately, many businesses had to either close their doors or significantly change their ways of operating in order to comply with new government guidelines, putting a great strain on the economy. The original 2020 budget was scrapped and new, short-term plans were put in place to ensure the survival of UK businesses.

As we now approach the end of 2020, it is time to start preparing for the 2021 budget- though this is no easy task due to the uncertainty that lies ahead. What we do know is that in order to prepare, the government must:

  • Evaluate the impact of the coronavirus crisis on the economy and fiscal position
  • Calculate the funds available to continue crisis and recovery measure spending
  • Determine the government’s financing needs
  • Account for the coronavirus related fiscal measures, including off-budget responses

The 2021 Budget will be a tricky one for Chancellor Rishi Sunak as we proceed through one of the biggest economic crises the country has ever seen. The 2020 budget deficit is estimated to be £370 billion– twelve times more than the amount predicted prior to the coronavirus crisis, meaning there is a lot to be fixed and accounted for.

Despite businesses expecting to return to more ‘normal’ times following the end of the 2nd UK lockdown, many are experiencing a loss of custom due to the ongoing COVID-19 restrictions.

How to Prepare Before and After the 2021 Budget

As tempting as it may be, try not to base any big decisions on predictions by journalists before the budget is announced! Relying too heavily on rumours and guesswork will make you feel pressured into taking a gamble with your business that could cost your hundreds, if not thousands of pounds if these predictions prove to be unfounded. 

This past year is a great example, as nobody could have predicted the significant impact of the coronavirus pandemic prior to the March 2020 Budget or the measures that would be put in place, including:

  • Statutory sick pay refund for SMEs
  • Support for increased costs or disruption to cash flow
  • Abolishment of business rates for small businesses
  • £3,000 cash grant for smallest businesses
  • Spending on transport and innovation

Instead of reading headlines and trying to predict what the Chancellor will do in the upcoming Budget, take the following steps:

1) Develop a Well Considered Financial Plan

Having a thorough plan allows you to increase the likelihood of your business being able to reach its goals and improve where possible, maximising your wealth and minimising liabilities. Set yourself detailed aims and objectives for the short-term, medium-term and long-term in the current economic climate.

With all the other daily pressures of running a business, strategic planning is often not given the attention it needs. We would recommend using a planning adviser who has the time and expertise to take the long view and advise on the right course of action before it’s too late. At Ryans, we have years of experience advising the local business community and a wealth of expertise for you to draw on. With straightforward and in-depth advice, we can establish your current position and make informed decisions to help your business function at its best in the future.

2) Reassess Your Plan After the Budget

After the budget has been announced, take another look at your financial plan and identify any opportunities or threats to your plan. This is where a SWOT analysis comes in handy. Our team at Ryans is constantly keeping an eye out for updates to tax laws, whether it be personal tax or business tax, as well as any other changes that could affect your business, looking for opportunities to save and make money and avoid detrimental mistakes.

3) Make any Necessary Changes to Your Financial Plan

Once you fully understand the changes following the budget, take the time to make the relevant adjustments to your plan, focusing on the finer details to ensure your business is benefitting as much as possible. If you aren’t sure of which changes to make, allow us to make suggestions that can help your business grow.

Not only can we help you to manage and create your financial plan, but our expertise and contacts will open doors that may otherwise remain closed. To find out more, get in touch with us today!

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